After nearly three months in lockdown, non-essential shops in England reopened their doors today. However, a combination of nervous shoppers and strict social-distancing rules is likely to hold back consumer spending and leave many retailers in danger of collapse.
“Retailers have been under immense pressure for the past three months but the reopening of non-essential shops from today is unlikely to deliver immediate relief,” said Helen Dickinson, the Chief Executive of the British Retail Consortium (BRC).
She was speaking after the release of data from ShopperTrak that showed UK retail footfall had plummeted 81.6% in May, due to the lockdown. This was a slight improvement on the 84.7% decline seen in April as some garden centres and homeware shops reopened last month.
Dickinson said that even as other retailers started trading there was “still a risk that many physical shops could end up closing their doors again – only this time, permanently”.
She called on the government to consider options to stimulate demand, such as a short-term reduction in VAT or a temporary income tax cut for lower-income workers.
Prime Minister Boris Johnson stated on Sunday that he was “very optimistic” about stores reopening. “I think people should shop and shop with confidence but they should of course observe the rules on social distancing and do it safely as well,” he said.
Meanwhile, Rishi Sunak, the Chancellor, is believed to be considering either a blanket or a targeted reduction in consumption taxes to stimulate consumer spending and protect jobs.
The government has also raised the possibility of the restrictive two-metre social distancing rule being relaxed by setting up a review looking at its effect on the economy and public health.
Compared to other European countries – France, Germany, Italy and Spain – the UK’s retail sector will be the last to start its recovery process, having already had the longest disruption. Other countries that have lifted their lockdown have seen retail footfall rise by around 15-25 percentage points in the initial weeks, and many UK retailers will be hoping for similar, if not larger rises.
Andy Sumpter, Retail Consultant at ShopperTrak, said:” In the short term we expect consumers will visit less, but buy more each visit, making each shopper all the more precious. Footfall has a totally new value.”
He added: “Retailers will have to adapt quickly on how to manage social distancing and site occupancy levels, and give consumers comfort as they start to come back. Initially, consumers may give retailers some goodwill, but soon enough, if there’s a smaller queue, better managed carpark or a seemingly safer, easier shopping environment… shoppers will vote with their feet. There are certainly tough times still ahead, but with our shops re-opening we are one step closer to normality, and we welcome that.”
NAM Implications:
- Action Might Be Needed To Lure Nervous Shoppers: Classic Understatement of this unprecedented year?
- Those consumers that venture out and actually enter stores will be a precious commodity…
- …will need cultivating…
- Handle with care.
- Watch this space!
